The amendment in the Banking Offences and Punishment Act, 2064 (2008 A.D.), introducing key changes to the legal framework surrounding cheque bounce cases, including procedures for investigation and the imposition of penalties. With the new amendment, only the police are now authorized to investigate cheque bounce cases and initiate legal proceedings. Previously, individuals could directly file such cases in court.
Amendment in Definition:
- ‘Cooperative Bank’ means a cooperative bank established in accordance with Section 12 of the Cooperative Act, 2074 (2017).”
- ‘Cheque’ means a negotiable instrument drawn upon a bank or financial institution, or cooperative bank in accordance with prevailing law, instructing payment on demand.
- ‘Dishonor of cheque’ means a situation certified by a bank or financial institution, or cooperative bank under sub-section (5) of Section 3a, wherein payment cannot be made to the holder due to insufficient funds in the account of the account holder who issued the cheque.
- ‘Holder’ means a person or institution whose name the cheque is issued and who is entitled to receive the amount mentioned therein.”
Prohibition on Issuance of a Cheque without Sufficient Funds:
No person shall issue a cheque to anyone or request its payment from a bank, financial institution, or cooperative bank in a situation where there are no funds in their account or where the available funds are insufficient for payment. If, upon verification, the bank, financial institution, or cooperative bank finds that the account in question does not have sufficient funds to honor the cheque presented for payment, it shall return such cheque to the holder.
If the cheque is returned, the holder wishes to have the dishonor confirmed, the bank, financial institution, or cooperative bank shall, within a maximum period of forty-five days from the date the cheque was presented, notify the concerned account holder through any means to deposit the required funds into their account and shall maintain a record of such notice.
After maintaining a record of the notice given to the account holder, the bank, financial institution, or cooperative bank shall mention such fact on the cheque itself and return it to the holder. If, upon expiry of the period, the holder demands payment of the amount mentioned in the returned cheque, and the cheque cannot be honored due to insufficient funds in the account, the bank, financial institution, or cooperative bank shall, within three days, return the cheque to the holder with confirmation that the account holder dishonored the cheque.
Punishment & Fine:
In case the dishonor of a cheque is confirmed, the account holder who issued the cheque shall be liable to pay the cheque holder the amount equivalent to the suit amount, along with interest on that amount from the date of cheque issuance until the date of payment, as per the prevailing laws. In addition, the account holder shall be subject to a fine of five percent of the suit amount and imprisonment as follows:
(a) If the suit amount is up to fifteen lakh rupees, imprisonment up to one month.
(b) If the suit amount exceeds fifteen lakh rupees but is up to fifty lakh rupees, imprisonment from one to three months.
(c) If the suit amount exceeds fifty lakh rupees but is up to one crore rupees, imprisonment from three months to one year.
(d) If the suit amount exceeds one crore rupees but is up to ten crore rupees, imprisonment from one to two years.
(e) If the suit amount exceeds ten crore rupees, imprisonment from two to four years, regardless of the amount.”
Limitation:
A complaint may be filed within one year from the date the dishonor is confirmed, and the case must be filed before the concerned District Court within six months from the date of such complaint.
Deed of Compromise:
In cases relating to cheque dishonor under the Law, if the defendant pays the amount mentioned in the cheque to the holder and both parties desire to execute the deed of compromise, an application for deed of compromise may be submitted to the Government Attorney through the investigating officer if the case is under investigation, or to the court through the Government Attorney if the case has already been filed in court. Upon receiving an application for executing deed of compromise, the Government Attorney shall instruct the investigating officer to facilitate the execution of deed of compromise between the parties and to record the fact of such execution, and to order the concerned investigating officer to suspend the investigation accordingly. It shall be the duty of the concerned investigating officer to carry out the execution of deed of compromise and to maintain its record. If an application for execution of deed of compromise is submitted, the concerned court shall facilitate the execution of deed of compromise in accordance with the prevailing law. Upon such execution, the defendant shall not be liable to punishment under this Act.
Repeal
Section 107A of the Negotiable Instruments Act, 2034 (1977) is hereby repealed. Any case filed with a claim for punishment under Section 107A of the Negotiable Instruments Act, 2034 (1977), prior to the commencement of this Act, shall not be barred from proceeding and being disposed of in accordance with that Section.